Reactor Work Faces Delays

Unit 2 Expected in Late 2018

JENKINSVILLE – Construction on a pair of new reactors at the V.C. Summer Nuclear Station has hit another snag as South Carolina Electric & Gas (SCE&G) investors learned Monday that completion of the project will be delayed until at least late 2018. The news was revealed in a conference call between Steve Byrne, CEO of SCE&G, Jimmy Addison, CFO of SCANA Corp. and representatives from eight investment firms.

“(T)he Consortium (Westinghouse and Chicago Bridge & Iron, or CB&I) began working on a full rebaselining of construction schedules for Units 2 and 3 at V.C. Summer in late 2013,” Byrne told investors during the conference call. “They recently provided us with a preliminary integrated project schedule, or IPS, indicating that they now expect the substantial completion of Unit 2 to occur in late 2018, or during the first half of 2019, with Unit 3 being substantially complete approximately 12 months later.”

The cost of the delay was unknown at press time, since the consortium had not yet provided SCANA (SCE&G’s parent company) with updated cost data, a SCANA spokesperson said Tuesday. SCE&G, she said, has not accepted responsibility for any delay related costs, placing the blame squarely at the feet of the consortium. Whether the delay will translate into a request by SCE&G for a rate increase from the S.C. Public Service Commission (PSC) was also not known.

“We will not be able to project rate-related impacts until the revised schedule and cost estimates are completed,” the spokesperson said.

Byrne told investors he expects to get a cost estimate from the consortium before the end of the quarter.

“What I anticipate,” Byrne said during the conference call, “is that the first number that I get from the consortium is going to be something I’m not going to like, and they’ll use that as one peg for negotiations. And we’ve seen that before.”

Tom Clements, director of the nuclear watchdog group Savannah River Site Watch, said the delay comes as no surprise, and neither would rate hikes.

“We have warned from the start of this risky project that it would face significant delays and cost increases so there is unfortunately no big surprise in SCE&G’s stunning news,” Clements said. “SCE&G rate payers, already facing seven rate increases to pay in advance for the nuclear project, will likely take it on the chin by the cost increases due to the announced delays.”

SCE&G will have to go before the PSC to seek approval for the delay as it falls outside the 18-month delay period allowed by the PSC when it originally approved the project. Byrne told investors that the Base Load Review Act provides that the PSC would grant the request “as long as it is determined that the change is not the result of imprudence on our part.”

The V.C. Summer project involves the construction by CB&I of two Westinghouse-designed AP1000 reactors, an experimental design never before built or operated. Key modules for the reactors are being built at the CB&I facility in Lake Charles, La., where chronic problems have brought it under the close scrutiny of the Nuclear Regulatory Commission (NRC).

“From our perspective, the culprit on the delay so far has been the structural modules coming out of Lake Charles,” Byrne told investors.

Byrne said the consortium is moving production of modules to other firms in Oregon and Virginia, but some sub-modules arriving on site now were manufactured at Lake Charles, which in recent months has been on schedule, he said.

The next big module to come out of Lake Charles is the CaO-1, a large structural module that fits inside the containment vessel. “It will go around and form the cubicles for things like the steam generators or reactor vessel, the refueling cavity,” Byrne said, “those kinds of things.” Setting of the CaO-1 is not a milestone for the project, he said, but its installation is a hold-up for other major milestones.

“We’ve got a module called CaO-3, which forms a large portion of the large water tank that goes inside the containment vessel,” Byrne said. “I cannot set the CaO-3 until CaO-1 is set. SO even if CaO-3 is on site and may be constructed and ready, I won’t be able to set it because CaO-1 will not be set. So that structural module, CaO-1, has been constraining other things.”

Byrne said CB&I has recently undertaken an overall review of the project and has integrated those findings into the new work schedule it presented to SCE&G last week.

“We should be beyond the Lake Charles obstacle shortly,” Byrne said.

The schedule for the project was previously reworked in 2012, a SCANA spokesperson said.